Special rules make excise taxes
even more complicated
Aug. 26, 1999 -- September may only have 30
days, but that's enough time to make the rules for depositing excise
taxes more complicated than they already are. A related tax
tip specifically addressed rules concerning excise taxes payable
with Form 720. It focused on a general rule of thumb for depositing
excise taxes, the 9-Day Rule and its exception, the September Rule.
This tax tip addresses special
rules for depositing excise taxes for ozone-depleting chemicals,
fuel, communication and air travel. It also explains complications
added to these deposits by the September Rule. Keep in mind that
the deadlines discussed here will
differ for businesses required to make electronic deposits.
periods and making deposits
There is no apparent rhyme or reason to dates assigned by the
IRS for deposits. The IRS bases due dates for deposits on one of
two semimonthly time periods. These periods consist of the first
15 days of the month and the 16th day of the month through the end
of the month. Remembering these two semimonthly periods will simplify
the rules concerning due dates for depositing excise taxes.
If a business owner doesn't electronically deposit
tax payments, the deposit must include Form 8109, Federal Tax
Deposit Coupon. Business owners who don't have a coupon book
should contact a local IRS office or call 1-800-829-1040.
Rule and ODCs
If a business uses ozone-depleting chemicals or imports products
containing these, it has to pay a special excise tax. Along with
the tax comes an additional excise tax deadline to remember, the
30-Day Rule. Deposits of these taxes from a particular semimonthly
period are due at the end of the second semimonthly period that
follows. Taxes for the first semimonthly period are due the 15th
of the next month. The due date for taxes from the second semimonthly
period is the end of the following month.
Business owners using ODCs need to pay particular
attention to tax deposits for August and September. The 30-Day Rule
has an exception known as the September Rule. In 1999, taxes for
the last 16 days of August and first 10 days of September are due
Sept. 28. Taxes for other periods are to be paid as described in
the paragraph above. For example, taxes for the period from Sept.
11 through Sept. 15 are due Oct. 15.
There is a special September Rule for electronic
deposits. Taxes for the last 16 days of August and first 11 days
of September must be deposited electronically by Sept. 29.
Rule and fuel taxes
Independent refiners or manufacturers that produced fewer than
1,000 barrels of crude oil per day in the previous quarter must
pay excise taxes for kerosene, gasoline or diesel fuel. Deposits
of these taxes for a semimonthly period are due 14 days later. Thus,
the deposit for the first semimonthly period is due the 29th day
of the month, while the due date for the second period will be the
14th day of the month that follows. Keep in mind that if these due
dates should fall on a legal holiday or weekend, the deposit must
be made on the first business day that precedes this date.
Guess what? As luck would have it, there is
a September Rule for this excise tax. For 1999, taxes for the period
from Sept. 16 through Sept. 26 are to be deposited electronically
by Sept. 29. Pay deposits for taxes over remaining periods of these
months as described above. For example, taxes for Sept. 27 through
Sept. 30 are due Oct. 14.
and air transport taxes
Business owners who have to pay excise taxes for communications
and air transportation can base the tax on the amounts that they
have collected and use the 9-Day Rule to make the deposits. Some
of these taxpayers can also base their deposits on the amount considered
as collected. This is called the alternative method.
Business owners who use the alternative method
separate the "collection" period from the "billing"
period. The idea is that they don't collect any tax included in
items billed or tickets sold until the first seven days of the second
semimonthly period that follows the semimonthly period covered by
the bill. These deposits are due the third banking day after this
seventh day. Are you sure you don't want to follow the 9-Day
Those business owners who use the alternative
method will have to keep a separate record of the tax included in
amounts billed or tickets sold during the month. They also need
to be careful when they complete Form 720. Even though they are
using the alternative method, they will still report the tax included
over the billing period instead of the tax collected.
What is the only way this method can become
even more confusing? That's right, let's see what happens in September.
For 1999, business owners using the alternative method must deposit
any communications and air transportation taxes included in amounts
billed or tickets sold from Sept. 1 through Sept. 10 by Sept. 28.
Tax deposits for remaining periods are due on the third banking
day after the seventh day that follows that semimonthly period.
If deposits are electronic, there is a different
deadline to follow for the September Rule. Sept. 29 is the due date
for electronically depositing communications and air transportation
taxes for products billed or sold from Sept. 1 through Sept. 11.
-- Posted Aug. 26, 1999